Clem's Chronicles: Credit Cards/GM & Chrysler/South

April 23, 2009

By CLEM LANE

Howdy-here's tonight's editorial note.......

CREDIT CARDS-Credit cards. You can’t live with ‘em and you can’t live without ‘em. President Obama met with representatives from 14 major credit card companies this afternoon at the White House to figure out how to alleviate some of consumers’ credit card pain. “The days of any-time, any-reason rate hikes and late-fee traps have to end”, the President told the assembled group. Jake Tapper in his WORLD NEWS piece introduced us to Douglas Corey, whose story will hopefully not happen to you. Tapper: “When Douglas Corey inadvertently made a payment that was less than the minimum required, his interest rate more than doubled to almost 29%, compounding his debt.” Corey’s calls to his credit card company seeking to rectify the situation yielded “there’s nothing more they could do” responses. So what does the President suggest the credit-card companies should do? Tapper: “More effective oversight. Banning unfair rate increases, abusive fees and penalties and making language in contracts easily understood.” And the industry reaction? Tapper: “some attendees told abc news they thought today’s meeting was more political theater than substance. The industry believes for the most part they are doing what they need to survive in a recession as Americans rack up more debt than ever before and are having trouble paying their bills.” Tapper also noted in his close that the credit card companies think new regulations to be issued by the Federal Reserve should suffice, that legislation on the matter is unnecessary. Tapper: “The President said ‘well go ahead and make your case, but I disagree’.” Both the House and Senate are working on bills to offer greater consumer protections. Obama has made clear he plans to work with Congress and the industry to sign a law.

GENERAL MOTORS/CHRYSLER AND THE STATE OF THE AUTO INDUSTRY-It’s official. General Motors announced a significant summer shutdown. Chris Bury, reporting for WORLD NEWS, explains: “13 GM assembly plants from Texas to Michigan, Kentucky to Delaware, will grind to a halt in May for up to nine weeks. Thousands of auto workers forced to rely on state unemployment and union benefits.” One reason? The huge backlog of unsold cars filling car lots across the nation. Bury: “with sales down 50% this year, the idea is to sell off these cars and save billions.” Unfortunately, it won’t be just GM employees affected. Bury: “the impact will also sting a huge network of suppliers, from the makers of steel to spark plugs. For states like Michigan already suffering with the nation’s highest unemployment, it means even more pain.” As for Chrysler…Bury tells us that “late today came word that the Justice Department is working on a way to protect (Chrysler) workers pensions in bankruptcy. That appears unavoidable without a merger with Fiat, the Italian automaker, in the next few days.”

SOUTH CAROLINA FIRES- South Carolina's biggest wildfire in more than three decades - a blaze four miles wide - destroyed dozens of homes today and threatened some of the area's world-famous golf courses at the height of the spring tourist season. Stephanie Sy reporting on WORLD NEWS noted that “unusually high wind gusts blew (the wildfire) from heavily wooded areas into populated residential areas, which have been developed in the middle of Carolina pine forests.” The fire moved incredibly fast with one firefighter noting in Sy’s piece that “each house went within 15 minutes” And the fire shows no signs of being contained anytime soon-winds are expected to continue and there’s no rainfall in the forecast for the next four or five days. Sy: “officials say it may be weeks before the fire is completely out.”

PAKISTAN DILEMMA: The thought of a nuclear armed country controlled by the Taliban might not seem that far-fetched. There’s word today that Taliban militants have pushed out from the Swat Valley to villages as close as 60 miles from the capital of Islamabad. Secretary of State Clinton tells a House subcommittee: “I do believe there is an increasing awareness of not just the Pakistani government but the Pakistani people that this insurgency coming closer and closer to major cities does pose such a threat.” And for good reason. Martha Raddatz recently spent some time in the troubled country: “Just a few hours’ drive from Pakistan's capital, hundreds and hundreds of Taliban fighters are now roaming freely through the streets - setting up checkpoints and terrorizing the local population. The areas now controlled or being threatened by the Taliban--threaten the entire country.” Trouble is, according to Martha: “The Pakistani Army has done little to stop it...sending in only a few hundred police to confront the Taliban. In the Swat Valley....the Taliban now have a solid safe haven..thanks to a deal they made with the Pakistani government. They impose strict Islamic law, destroying schools and flogging people publicly for defying their authority.” And what about all that money the U.S. has invested in Pakistan? (Some $10-billion.) Martha says: “Officials say some of the money was used to pay the Taliban to keep fighting the Americans, so the Pakistanis would continue to get US dollars. The Obama administration still wants to give nearly half a billion more in aid......but with stricter controls.” As Secretary Clinton put it: “"Key to our new strategy for both Afghanistan and Pakistan is to hold ourselves and our partners accountable, and we are committed to doing that.” (thanks to Ed Bailey for this entry)

BANK OF AMERICA/MERRILL LYNCH RESCUE-From Rich Esposito/Betsy Stark and Charles Herman: “The CEO and Chairman of Bank of America says he was threatened by the Bush Administration's Secretary of Treasury when he considered backing out of a deal to rescue Merrill Lynch, according to testimony he gave to New York Attorney General Andrew Cuomo The stunning disclosures of a behind the scenes power play by top government officials are the talk of Wall Street and Washington today. In his testimony, Bank of America CEO Ken Lewis told New York's Attorney General that then-Treasury Secretary Henry Paulson threatened him on December 21st with the prospect of removing the management and Board of Directors of the bank if Lewis refused to complete the merger with Merrill Lynch even though Merrill was hemorrhaging money.” You can read more in their ABC NEWS BLOTTER offer

IRAQ SUICIDE BOMBS-One of the bloodiest days in Iraq in recent times today. Suicide bombings have left nearly 80 people dead, highlighting potential security gaps as Iraqi forces increasingly take the reins from the U.S. At least 31 people were killed in Baghdad as they waited for food aid. In Diyala province, 47 were killed inside a roadside restaurant filled with Iranian pilgrims.

OIL COMPANY EARNINGS-So how is Big Oil coping with the lower prices for crude and gasoline? Not great if earnings announced today are any indication. Conoco, the nation's third-largest oil company, and smaller producer Occidental both reported an 80 percent drop in first-quarter profit. With crude prices near five-year lows in recent months, it could be the worst earnings season in years for the oil sector. A barrel of crude was trading for less than $50 Thursday on the New York Mercantile Exchange, a third of what it cost in July.

OTHER STUFF- -- POLO HORSES-An official at a Florida pharmacy said today the business incorrectly prepared a supplement given to 21 polo horses that died over the weekend while preparing to play in a championship match. Jennifer Beckett of Franck's Pharmacy in Ocala, Fla., said in a statement that the business conducted an internal investigation that found "the strength of an ingredient in the medication was incorrect." The statement did not say what the ingredient was. -- MARCH EXISTING HOME SALES were down 3 percent to an annual rate of 4.57 million units. That compares to a downwardly revised pace of 4.71 million units in February, the National Association of Realtors said Thursday. Dan Arnall notes “The report comes in lower than economist expectations of sales around 4.65 million units. Sales have been hovering in this range for about six months. The ragged up-and-down is hinting at a bottom in the market. But just because we’ve likely found a bottom doesn’t mean we’re going to see the market jumping back up.” -- FREDDIE MAC SUICIDE-Per Jack Date, the autopsy of David Kellermann has been completed and “nothing that would contradict” death by hanging was found. Lab results could still take several weeks. Date also confirms “that a Freddie Mac human resources official had talked to David Kellermann about taking some time off, days before he apparently took his own life. A source familiar with the situation tells ABC News that Mr. Kellermann had expressed a desire to take a few days off. The source said everyone was acknowledging that Mr. Kellermann had been working very long hours and needed a break.” -- PRESIDENT OBAMA 100 DAYS NEWS CONFERENCE—President Obama plans to deliver a prime-time news conference next Wednesday/29 at 8pm ET (which marks his 100th day in office).